JPY Forex-Archive

Daily Economic News - Feb 29, 2008

Yesterday the Japanese yen gained against the 16 most traded currencies. The yen rose against its major counterparts as falling stocks led investors to cut holdings of higher-yielding assets. Yesterday the JPY advanced 2.8 percent to 13.92 per rand and gained 1.2 percent versus the New Zealand dollar as investors reduced carry trades. The U.S. currency also approached a 2 1/2-year low versus the JPY by breaching below the 105.00 per dollar mark. The prime sentiment is that the U.S. currency will continue to be battered as the economy suffers and the JPY will continue to gain momentum as “anti-risk” sentiment applies a strangle hold on carry trades. In addition, on the basis of Japanese data which was released today, there was a surprising jump in consumer spending and rising consumer prices which will also likely assist to push the JPY higher today and the Japanese currency is likely to remain in the bull ring over the near term.

Daily Economic News - Feb 28, 2008

The JPY rose against the EUR and 14 of the 16 most-active currencies as Asian stocks fell, encouraging investors to reduce holdings of higher-yielding assets funded with loans in Japan. It rose to 160.51 level against the EUR from 161.00 in New York yesterday. With stocks falling, the JPY is being propelled by risk reduction among investors. Japan's currency may move between 106 and 107 per USD for the rest of this week Japanese retail sales rose 1.5% in January from a year earlier, marking the sixth straight month of increases, according to the government report. There are several news releases expected to come from the Japanese market tonight, as the first will be the Manufacturing PMI at 23:15 GMT. With a forecast of 52.0, we can see that there is a positive view towards Japan's growth in the manufacturing sector and for its economy in general. Slightly later at 23:30 GMT the Core CPI is expected to be released with a forecast of 0.9%, and a previous release of 0.8%, we can see that Japan's inflation level should continue to be inline with expectation, proving that the journey towards a stronger and more stable economy continues full steam ahead. It appears that the JPY will continue to gain against most currencies in the near future, as it is consistently showing strong data and solid monetary policy, with the majority of the economic forecasts seeing the continuation of growth for 2008.

Daily Economic News - Feb 27, 2008

The JPY was one of the few currencies that failed to gain ground against the freefalling greenback yesterday. The JPY range traded against the USD yesterday as the euro-dollar pair grabbed center stage on the trading arena as a result of key U.S and Euro-zone data releases. The JPY may find itself losing more ground versus the greenback despite the fact that the USD has been weakening all across the board. The main reason for this is the fact that the continuing rate cuts by the Fed have reduced global liquidity level concerns and therefore investors may now prefer to place their funds in countries where the yield is high. So we may see carry trades back in action in the near term despite the fact that slowing global economic growth is driving risk aversion.

Daily Economic News - Feb 26, 2008

The JPY fell broadly yesterday as news over the U.S. bond insurance sector boosted stock prices and other risky assets. The JPY also fell after a report showed declines in the sales of Existing Homes in the U.S. slowed last month, signaling the housing slump may be closer to a bottom than ever before. The USD/JPY dropped to a session low of 108.21 before consolidating around the 108.00 level by the end of late Tokyo session. Risk aversion has subsided and appetite among investors to borrow in JPY and invest in risky high-return investments is back in play. The Yen often suffers in times of rising risk appetite because investors borrow it at low Japanese interest rates to fund "carry trades" that invest in higher-yielding currencies and assets. It appears that in the short term the JPY might suffer in this environment. There is no significant economic news coming out of Japan today. We should see the JPY continue on its bearish path. As for the long term, we need to keep in mind that March is the most volatile month for JPY and we'll take a more in-depth look into what this could mean for the JPY crosses as we approach the pivotal month. As the Japanese fiscal year nears its closing we should begin to get a clear picture of future trends.

Daily Economic News - Feb 25, 2008

The trading week opened today, with a decrease in the JPY against 15 of the 16 most actively traded currencies. A large part of this is due to the resumption of carry trading due to rising stock prices around the world. Investor returns to higher-yielding assets funded with loans from the Japan restarted itself on Friday of last week. As commodities and stock prices charge upwards, the JPY will should see acceleration in the bearish trend. The week ahead we expect a set of key Japanese data, a rarity in the often dominating European/American relevance of economic data. Retail Sales, Industrial CPI and Overall Housing spending highlight a busy week for the JPY. Still though, with the rising volatility seen toward the end of last week, expect the JPY to make most of its movement in response to US economic data, as has been the case over the last several weeks. Today we can expect annual CSPI numbers at roughly 23:50 GMT, though it should contribute significantly to JPY movement, expect the JPY to recover from its bearish opening to the week.

Daily Economic News - Feb 22, 2008

Yesterday, the JPY became a spectator along with most currencies to the tumbling of the US dollar. After several weeks of avoiding negative economic data, the greenback has now taken a freefall against every major currency. USD/JPY indices fell nearly 100 pips yesterday, before making a slight recovery in early morning trading on Friday. The slight recovery came just around the same time that BOJ Governor Fukui voiced his concerns over the wariness of the Japanese economy due to its close relationship to the dollar. Fukui touched upon the growing risks in the US economy and the volatility in financial markets across the board. Fukui specified that 'A slowdown of the US economy is intensifying, while global financial and capital markets continue to be unstable.' It is of the utmost importance to for the JPY if it looks to thrive, that the world economy provides a stable environment for the low yielding currency. As Japan is now suffering a bit from a slowing housing market, Fukui stated that without the return of investor confidence, Japan is willing to make 'appropriate policy decisions' regarding its currency. Today there are no Japanese economic events on tap.

Daily Economic News - Feb 21, 2008

The JPY fell yesterday for the 7th straight day against the EUR and stood relatively unchanged vs. the USD. The Yen declined only 0.09% to 108.27 per USD by the end of the Tokyo session. According to yesterday's Japanese Ministry of Finance data, the Trade Balance notched its biggest deficit in 2 years as higher Crude Oil and natural gas prices drove imports up. The Japanese trade balance indicated a dramatic weakness in Japan's export growth due to the fact that imports rose 9% in January causing a trade deficit. The BoJ has been adamant that Japan's long, but extremely shallow, recovery is still in place. However, without the foundation of a healthy domestic economy the risks are high for Japan to return into a recession. The Japanese economic calendar does not include any additional events for today. Forex traders should keep an eye on the economic events around the world, as today could prove to be another very volatile day for the Japanese currency. .

Daily Economic News - Feb 20, 2008

Since the beginning of February, the Yen crosses have been trapped within a wide trading range, making those involved in carry trading struggle to properly define the overall market outlook. Volatility in the financial markets continues to be very high, which has made it very difficult for carry trades to recover from last month's poor showing. Investors should expect this situation to continue as the US economy is not reflecting any signs of stability in the near future. The Japanese economy has found itself once again in its own recession scare, after most investors thought that Japan's economic recovery was completed. Yesterday's monetary policy meeting minutes touched upon Japan's wariness regarding downside risks from the US. Today see's two scheduled events from the Japanese economy. At 23:50 GMT we will see the release of the All Industries Activity Index and Trade Balance figures. Both are expected to see mild improvement, as it could help put a positive spin on JPY forecasts. Still, the key Japanese event will come on Friday, when BOJ Governor Fukui is expected to clarify the current status of Japan's economy and where it's headed in the near future. Look for the JPY to continue range trading today, as it will be most affected by today's basket of US economic events.

Daily Economic News - Feb 19, 2008

The JPY depreciated vs. the USD yesterday as the pair tested offers around the 108.30 level and was supported around the 107.75 level. The Bank of Japan monthly report echoed the same tone held by BoJ Governor Fukui last week. The report talked about the ongoing slowdown in the U.S. economy and its potential impact on the Japanese economy. The JPY also declined against the USD after Japan's former top currency official said the economy may enter a recession for 1 or 2 quarters this year. Also yesterday, the Tertiary Industry Activity Index deteriorated in the month of December, led by a sharp decline in retail activity. The Japanese economy continues to be extremely sensitive to global demand and the interest rate policy will remain dormant until the BoJ sees concrete signs of improvement. Ironically, negative news on the global economic front will likely lead to a strengthening of the Japanese currency while positive news will drive the JPY lower as carry trades dominate flows. Today, the only news to come out of the Japanese financial market is the Monetary Policy Meeting Minutes. The Bank of Japan Meeting Minutes is a detailed record of the bank's Interest Rate meeting held about one month earlier. This indicator is of quite a minor importance, therefore today, most price movement of JPY pegged currencies will be derived from the U.S. and the European financial data.

Daily Economic News - Feb 18, 2008

The JPY fell sharply last week as carry trades were back in action on the back of Warren Buffets offer to shore up more than $800 billlion worth of municipal debts. However this carry trade reversal was only temporary and as the market digested this news of the Buffet Plan the JPY climbed back onto the bullish wagon because global economic uncertainty continued to heavily weigh down on investors and risk aversion once again seized the financial markets. The most significant news from the Japanese economy last week was the Interest rate Announcement by the BoJ on Friday. The BoJ kept its key benchmark rate unchanged at 0.5%, which is one of the lowest interest rate levels in the world making the JPY a carry trade favorite. BoJ Governor Fukui stated on Friday that the BoJ will assess the downside risk to the economy more closely as global financial markets have continued to display signs of instability and the global economic outlook is still uncertain. However the Japanese economy is still on the recovery path and it seems that the BoJ intends to resume its interest rate adjustment as economic circumstances permit it to do so. Therefore the JPY should be able to maintain its bullish momentum in the near term, especially if the global economy continues to slowdown sparking further risk aversion.

Daily Economic News - Feb 15, 2008

The Japanese Government published yesterday good economic data. The Gross Domestic Product rose from 0.4% to 0.9% in the 4th quarter. At the same time, the Industrial Production increase more than forecasted, suggesting that Japan's positive momentum is till in. Bank of Japan Governor Fukui will probably leave the overnight lending rate at 0.5%. The BoJ will possibly remain quit passive through the 1st quarter of 2008. The conclusion to keep the interest rate fixed was commonly expected by the policy board as the effects of the U.S. subprime crises keeps on and resounds in the global markets. Many investors around the world began shifting chancy assets due to continuous uncertainties which still effecting the sluggish U.S. economy over the global economy. Due to this fact investors believe that the BOJ will not increase its key interest rate until the middle of next year. Apart from the Interest Rate Announcement, today the Japanese economic calendar is barren of any scheduled events. Forex traders should keep an eye on the economic events around the world, as today could prove to be very volatile.

Daily Economic News - Feb 13, 2008

The JPY declined all across the board yesterday after Warren Buffet's plan to shore $800 billion worth of municipal debts. This news sparked a risk appetite among investors and therefore carry trades were back in full swing, albeit temporarily. The JPY managed to recoup some of its losses as investors realized that this move was not enough to change the current negative sentiment surrounding the global economy. Earlier today during the Asian trading session the only news released from Japan was the Current Account and the CGPI figures. The Current account came in at 1.86T, which was slightly below the previous figure of 1.90T but still very strong. The CGPI figure, which measures the rate of inflation experienced by corporations when purchasing goods, released at 3.0% which was noticeably better than the forecasted figure of 2.7%. The JPY should continue to rebound today as risk fear resumes it's strangle hold on investor sentiment as the market now moves forward from yesterday's positive news. So with the outlook for the global economies remaining bleak, carry trades should continue to unwind and the JPY should maintain its positive momentum although a JPY level below 106.00 versus the greenback could dampen Japanese exports dramatically.

Daily Economic News - Feb 12, 2008

General market unease helped the JPY continue to benefit from heightened global risk aversion, edging higher yesterday against the USD at 106.30. Last weekends' Group of Seven Industrialized Nations meeting in Tokyo offered little news for foreign exchange markets. Finance leaders' focus on the crumbling U.S. housing market and its impact on world economic conditions and bank lending added to risk aversion, thus helping the JPY. Today, will be very light on market moving news from Japanese markets with only CGPI and Current Account due to be released at 23:50 GMT. The CGPI, Corporate Goods Price Index, measures the rate of inflation experienced by corporations when purchasing goods. The Current Account measures the quarterly difference in value between imported and exported goods, services, income flows and unilateral transfers. Both of the indices are not considered to be market movers. Today, the USD/JPY still remains vulnerable to risk aversion sell-offs. The JPY should continue to range trade at current levels and may even retreat slightly. The week ahead will feature several key pieces of data from Japan, including January consumer confidence,Q4 GDP, industrial capacity and more importantly, the Bank of Japan monetary policy decision. Also, the BoJ will release its February monthly report.

Daily Economic News - Feb 11, 2008

Despite the fact that U.S. stocks continued to weaken and last Fridays' Eco Watchers Survey printed at weaker than expected, carry trades have since stabilized. Overall, the JPY finished off trading last week 0.2% higher at 107.32, as investors looked across the water to Europe and the U.S. to find more attractive returns on their money. According to the latest Tankan survey most Japanese corporations forecast the value of USD/JPY in 2008 to be at around 113.00. With the pair now trading at 107.30 those hedges are deep in the red indicating that profit margins for exporters will suffer. Today, the Japanese market will be closed due to the National Foundation Day. Currency markets are expected to be relatively quiet with Japan on a holiday, and there probably will not be too much volatility in the wake of Friday's Interest Rate Announcement and the BoJ Monthly Report. In the week's Japanese economic calendar, we will also see the release of GDP numbers as well as several industrial figures.

Daily Economic News - Feb 7, 2008

The JPY continued its bullish surge yesterday as carry trades continued to unwind ahead of today's two major interest rate announcements by the BoE and the ECB. Also another major contributor to the current carry trade unwind was the fact that Asian stocks posted their biggest loss in over two weeks as a result of concerns over the state of the global economy. The JPY is likely to continue to appreciate as long as risk-aversion maintains a strangle hold on investors. Earlier today during the Asian session the only news released out of Japan was the Machine Tool Orders figure, which measures the total value of new orders placed with machine tool manufacturers, and it remained unchanged at 3.7%. The only other important news to be released from the Japanese economy this week will be the Core Machine Orders, which measures the total value of new orders placed with machine manufacturers, excluding orders for items with a volatile sales cycle. This figure is expected to come in significantly better than last month's figure of -2.8%, at -1.0%. This is very positive for the Japanese economy as when manufacturers increase their purchasing of machinery it signals that the manufacturing industry is in an expansion phase. However this data is unlikely to cause any sharp movements in the JPY as the JPY gains remain consistent with the current situation of higher risk aversion.

Daily Economic News - Feb 6, 2008

Despite a widespread liquidation of carry trades, the JPY was little changed against the USD yesterday. The JPY rallied against a number of majors due to continued concerns surrounding the U.S. economic slowdown. Overall the USD/JPY traded with a low of 106.60 and a high of 107.74 before closing the day at 106.73 in the New York session. This morning, the Japanese index of Leading Economic indicators released inline with expectations at 40%, but still the number stands much below 50% (the acceptable minimum for a growing economy). The data suggest that downside risks to the Japanese economy are increasing. Recently released industrial output figures showed negative production forecasts for January and February. Today is expected to be a devoid of data so we should see the JPY continues on its bearish path.

Daily Economic News - Feb 5, 2008

The JPY saw a decline in value yesterday versus most of its major counterparts as carry trading slowly picked up pace ahead of expected Australian interest rate hikes. Another interesting trend has been the relationship between the JPY and the global stock markets, as the Japanese currency gets its most movement when responding to global financial trends. More importantly has been the direct relationship between carry trading and the Dow Jones. The two used to be directly correlated as one dictated the others movement in the opposite direction; however in recent days the trend seems to be changing. Yesterday the JPY spent a good portion of its time, in the midst of growing carry trade behavior, whereas the Dow Jones slowly fell all day long. Such behavior has forced investors to retool their strategies regarding the JPY. Today, the Japanese economy will be absent on the economic calendar as we look ahead towards Wednesday's Leading Index and Thursday's Machine Tool Orders. As the Aussie dollar continues to strengthen, this could push the JPY down further and further. This will likely be the case until at least the end of this week.